EDUCATION AND SKILLS

School Funding 2005–06

David Miliband: This statement relates to school funding in 2005–06.
	In my right hon. Friend the Secretary of State's statement to the House on 29 October 2003 he set out a package of measures designed to restore confidence in the school funding system, and deliver stability in school budgets and predictability for head teachers and governors. These included a minimum increase in every school's budget; additional resources to help every LEA to support schools with additional pressures; the reversal of planned cuts in the standards fund; and targeted transitional support to help all schools to achieve balanced budgets. He explained that these arrangements would apply for the two years 2004–05 and 2005–06; but that the precise level at which the various elements would be set would be updated for 2005–06.
	Evidence from LEAs' budget statements suggests that the measures put in place this year have been successful in restoring stability and predictability. In particular:
	the vast majority of authorities have passported the increase in their schools formula spending share to schools in full;
	overall, over two thirds of schools received a funding increase above the level of the minimum guarantee. The remaining third received a funding increase in line with the minimum guarantee;
	there is no significant difference in the number of schools receiving the guarantee by type of school (primary, secondary, special) or by size of school;
	the guarantee has been helpful in giving schools earlier information about the minimum level of their budget to aid planning and to provide stability and predictability; and
	the limit on central spend by LEAs has helped maximise schools' own budgets, while allowing for special circumstances in some authorities.
	We now need to look ahead to 2005–06. One of the things that authorities and schools have been telling us over the last year is that they would welcome earlier announcements from central government in order to enable them to plan ahead effectively. I am pleased therefore to be able to make this announcement over three months earlier than the equivalent announcement last year.
	As in 2004–05, our starting point has been an analysis of the cost pressures that will face schools in 2005–06. My officials have discussed these cost pressures—including increases in teachers' pay and support staff pay and pensions—in detail with local government representatives and the head teacher associations. Excluding the costs of workforce reform, to which I will return, our best estimate is that cost pressures on the average school in 2005–06 will be in the range from 3.8 per cent. to 4 per cent. There remain some uncertainties, in particular around the cost of local government pensions, which will impact unevenly on authorities.
	We have also considered the costs of the implementation of the national agreement on workforce reform. Earlier in the year, with the support of our partners, we undertook a survey of schools in six LEAs to get a better understanding of their starting points, how they plan to deliver the workforce reforms and to what extent this can be achieved through the redeployment of existing resources. I am grateful to all those LEAs and schools for their help.
	This work confirms that the pressures of workforce reform, and in particular guaranteed time for planning, preparation and assessment, will impact mainly on primary and nursery schools in 2005–06. The precise cost for individual schools will, of course, depend on the strategies chosen to implement the reforms and the amount of time that needs to be created, but we expect the average cost pressure to be between 0.8 and 1 per cent. for primary and nursery schools. The survey also indicates that most secondary and special schools will be able to implement the September 2005 contractual changes from their existing resources. We recognise that some secondary and special schools may incur additional costs, and will undertake further work with our partners during the autumn term to examine the nature and extent of these costs, including in particular the transfer of exam invigilation from teachers. It will be for schools and LEAs to take forward the results of this work through workforce remodelling and through the headroom provided under the arrangements I am announcing today.
	Of course, remodelling is not just about extra funding. We will continue to work with our partners, the national remodelling team and the network of LEA remodelling advisers and consultant leaders to offer guidance and support for all schools in implementing workforce reform. In particular, we will examine the support required by schools to manage effectively the transfer of exam invigilation from teachers from September 2005.
	Our priority for 2004–05 and 2005–06 has been stability in school budgets, and in 2005–06 all schools will therefore continue to have a guaranteed minimum funding increase which is at least equal to the average cost pressures which schools are likely to face. However, I also believe that it is important to retain flexibility for LEAs to respond to local circumstances by directing additional resources where they are most needed, especially since the costs of workforce reform will vary significantly between schools depending on their starting point.
	Against that background, I have decided that in 2005–06 the minimum guarantee should again be set at 4 per cent. for secondary schools. As in 2004–05, this means that pupil-led elements of schools' budgets will increase by 4 per cent. per pupil, and fixed elements by 4 per cent. in cash. A secondary school whose pupil numbers stay the same between 2004–05 and 2005–06 will therefore be guaranteed at least a 4 per cent. per pupil increase in its overall budget next year, on top of a minimum increase of 4 per cent. this year. Secondary schools whose pupil numbers decline will receive an increase of more than 4 per cent. per pupil, to help cover their fixed costs. And those whose pupil numbers rise will receive at least a 4 per cent. increase in their cash budgets, and an overall per pupil increase of at least 3.9 per cent.
	For primary schools, I have decided that the minimum guarantee should be set higher at 5 per cent.—to take account of the additional costs which these schools face in implementing workforce reform. Primary schools whose pupil numbers remain unchanged will therefore receive at least a 5 per cent. per pupil increase, and those with declining numbers will receive more than 5 per cent. Those with rising rolls will receive at least a 5 per cent. cash increase in their budgets, and an overall per pupil increase of at least 4.9 per cent. As with 2004–05, special arrangements will apply to schools with 75 pupils or fewer.
	The available evidence suggests that most special schools will be able to implement the national agreement on workforce reform at no net cost, though as I have mentioned we will do more work on this with our partners during the autumn term. Where costs arise they are likely to be very uneven across schools, and it is therefore more appropriate to deal with them by targeting LEA resources rather than through a higher minimum guarantee. The guarantee for special schools will therefore be set at 4 per cent. for 2005–06. The special arrangements that applied to the calculation of the guarantee for special schools will continue in 2005–06.
	Nursery schools received delegated budgets for the first time in 2004–2005 and therefore no guarantee applied to them this year. We have agreed with our partners that the cost pressures on nursery schools are likely to be similar to those on primary schools in 2005–06 and therefore the guarantee will be set at 5 per cent. for them. LEAs will be able to choose, in consultation with nursery schools, whether to operate the standard, pupil-led, form of the guarantee for nursery schools or a place-led version like that for special schools, depending on how their nursery schools are currently funded.
	All of these figures are the minimum increase in funding which schools of each type will receive in 2005–06. As with 2004–05, we expect the majority of schools to receive an increase that is higher than the minimum guarantee.
	Our work with LEAs on the cost of workforce reform also suggested that the costs of implementing the national agreement are likely to be highest for very small schools—i.e. those with under 100 pupils. The main reason for this is that it can be more difficult for a very small school to secure small proportions of support staff time in order to release teachers for planning, preparation and assessment time. In urban areas schools can collaborate to resolve these difficulties, but that can be harder to do in rural areas where travelling distances are greater. Subject to consultation, I therefore propose to apply a larger increase to the sparsity unit cost in the primary formula within the schools formula spending share, to direct more resources to authorities with a high proportion of schools in this situation. I am also doubling the announced increase in the school standards grant band for schools with under 100 pupils, to ensure that all small schools have some extra help with the costs of workforce reform.
	In October the Secretary of State promised that the income schools receive from the school standards grant and the standards fund would be uprated in line with the minimum guarantee in both 2004–05 and 2005–06, and the Learning and Skills Council promised to do the same for school sixth form provision. I can confirm today that:
	standards fund support for schools will be increased by 4 per cent. in 2005–06. Detailed allocations will be announced in the autumn;
	schools will be entitled to either a 4 per cent. per pupil increase in their school standards grant or their announced SSG band for 2005–06, whichever is higher; and
	the Learning and Skills Council will increase all its funding rates for school sixth forms by 4 per cent. in 2005–06.
	Of course the minimum guarantee must be backed by adequate resources for LEAs. Next year we expect the average increase in the schools formula spending share to be around 7 per cent. per pupil and I intend to set the minimum increase which any authority can receive at 5.5 per cent. per pupil. This is a minimum increase—the increase for most authorities will be higher. Setting the minimum increase at this level will again ensure that all authorities have some headroom after implementing the guarantee, to allow the local funding formula to operate or to direct additional resources where they are most needed. The provisional increase for each authority will be announced at the time of the local government settlement in the autumn.
	Authorities where teachers are on the outer London teachers' pay scale face particular pressures in 2005–06 because the value of that scale will increase by a higher amount than the national average increase in teachers' pay as a result of the award for September 2005 following recommendations by the School Teachers' Review Body. The minimum increase in the schools formula spending share will therefore be set at 5.8 per cent. for these authorities. Again, increases for individual authorities will be announced in the autumn.
	Next year the Government will again expect each authority to passport in full its SPSS increase into a matching increase in its schools budget, unless there are wholly exceptional circumstances.
	As in 2004–05, we also expect LEA spending on their central education budgets to rise no faster than spending on schools next year. LEAs will again be able to seek an exemption where exceptional local circumstances arise—23 such exemptions were agreed this year. The view of the schools forum will again be important when any applications for exemptions are being considered.
	In October the Secretary of State announced a package of transitional support that would be available to authorities to help schools experiencing particular financial difficulties to bring their budgets back into balance. The main element of that package was a targeted grant, totalling £120m nationally, which went to the 51 authorities that would otherwise have had the lowest increases in revenue support for education between 2002–03 and 2004–05. The Secretary of State indicated in his October statement that around half this amount would be available to the same authorities in 2005–06.
	I can now confirm that the same 51 authorities will be eligible for exactly half of this year's allocation in 2005–06, subject to broadly the same conditions that applied this year. In particular, eligible authorities will need to update the transitional support plans which were agreed with my Department earlier this year, to show how they will use the additional funds to target schools in the greatest difficulty and bring their budgets back into balance. I am placing a list of transitional grant allocations in the Library. No further transitional grant will be available from 2006–07.
	This year we also amended the school funding regulations to give all local authorities the flexibility to target their own resources outside their school funding formula to support schools in financial difficulty. A number of authorities have made use of this flexibility in 2004–05 and we propose to continue it in 2005–06.
	Finally, this year my Department, working with the national college for school leadership, KPMG and the head teacher associations, set up a programme of financial management training and support to help head teachers and governors to manage their budgets more effectively. This programme—which has focused in the first year on schools in authorities in receipt of transitional grant—has been very successful and received very positive feedback.
	I am pleased to say that the programme will continue into the coming academic year, and will be expanded to cover schools across the country. Workshops will be available for up to 10,000 schools, and will be based on a menu of options from which LEAs and schools can draw. In particular, workshops will be available to support schools with the financial management aspects of workforce reform, and of falling rolls. Follow-up consultancy will be available for schools that need additional support over and above the workshops, and financial management master classes will be held for LEA staff. The financial management in schools website will also be maintained and enhanced.
	The decisions I have outlined today will continue the successful arrangements which have been introduced this year and ensure that the stability and predictability that has been restored to school funding will continue in 2005–06. However, I have always been clear that these arrangements were a short-term measure. The dedicated schools grant that the Government have announced for 2006–07 and beyond, together with guaranteed three-year budgets for schools, will give head teachers and governors unprecedented financial security and confidence, and the ability to plan for the future. The arrangements for 2005–06 that I have announced today will provide an effective bridge to those longer-term arrangements.

DEFENCE

National Employers Advisory Board

Ivor Caplin: I am pleased to inform the House that yesterday evening I signed the National Employers Advisory Board memorandum of understanding with The Lord Glenarthur DL, chairman of the National Employers Advisory Board.
	The memorandum of understanding sets out the responsibilities and requirements of members of the National Employer Advisory Board. It underlines the seriousness with which the Ministry of Defence treats employers and their support for reservists. Lord Glenarthur and the National Employers Advisory Board play a central role in ensuring that the Government is accurately informed about employers' attitudes and concerns.

Adult Learning Inspectorate

Ivor Caplin: I am pleased to inform the House that I have signed a memorandum of understanding with the adult learning inspectorate on behalf of the MOD. This MOU provides for the introduction of an agreed annual rolling programme of independent inspection, re-inspection and oversight of defence training and education, including the welfare and duty of care provided within the training environment. The MOD is one of the largest single providers of training and education, particularly for those in the 16 plus age range, in the United Kingdom. MOD offers training for over 300 specialist career paths, and its educational development programmes range from basic skills and vocational qualifications to post-graduate level.
	In signing this, the MOD seeks to achieve:
	The implementation of quality assurance arrangements which guarantee high standards, meet MOD requirements, add value to the expenditure of public money and at least match the quality of comparable civilian learning programmes.
	The ability to have access to the national learning community to share good practice and benchmark defence training and education.
	The ability to maintain and update professional skills through continuous professional development activity in order to support the lifelong learning agenda and skills development in the MOD.
	The MOD and ALI will work together to develop appropriate working arrangements to facilitate a suitable training and inspection programme that will complement existing internal quality assurance and improvement procedures of the armed services implemented through the defence systems approach to training quality standard (DSAT QS), a British Standards Institute accredited private standard.
	This MOU marks an important milestone in helping to ensure that the MOD's highly regarded training and educational standards continue to improve and to ensure that its service and civilian personnel are provided the best opportunities to develop their skills in order to carry out their demanding roles in the face of the challenges of the 21st century.
	A full copy of the MOU is being placed in the Libraries of both Houses.

DEPUTY PRIME MINISTER

Local Government Spending Review 2004

Nick Raynsford: The announcement by the Chancellor of the Exchequer provides continued investment in vital local services and builds on the real terms increases in funding which we have been able to provide authorities since taking office. The spending plans provide the framework under which we will develop the long-term strategy for local government so that authorities become stronger, more confident and better performing.
	The plans provide for an additional £7.2 billion in general grant for local government programmes by 2007–08 compared to 2004–05, an annual average growth rate of 2.7 per cent. in real terms. It also provides for annual average real terms increases of 4.8 per cent. in the already record levels of local authority investment through capital support and PFI over the three years to 2007–08. We are also looking to local authorities to generate efficiency savings and productivity improvements totalling £6.45 billion by 2007–08 which will release additional resources to the front line. We are committed across Government to working with local authorities to help them achieve these savings and the Deputy Prime Minister has appointed Barry Quirk, the chief executive of Lewisham, to work with local government, Government Departments and other partners as part of this process. In addition Tim Byles, procurement champion and chief executive of Norfolk county council will continue to work with the regional centres of excellence, which will receive additional funding as a result of yesterday's announcement.
	The Chancellor's announcement will ensure that councils can continue to improve local services over the next few years while avoiding unsustainable increases in council tax.
	I am pleased to say that the Government will continue to allocate additional resources for the most disadvantaged areas through the neighbourhood renewal fund, which will be extended throughout the spending review period at the enhanced level of £525 million a year which has already been provided for 2005–06. The NRF will continue as a targeted, non-ring fenced grant.
	The plans provides a package of financial reforms for authorities. We will also be offering local authorities greater certainty of funding through the development of three-year settlements, and will be working closely with authorities to address the issues which need to be resolved. The Government will embark on a work programme with the LGA, CIPFA and the Audit Commission to develop proposals for a system that would mean that depreciation of assets would in time hit the bottom line in local authorities' accounts, and that would link Government support for capital for existing assets to the associated charges. We will also be consulting shortly on revisions to the system for delivering PFI support, with the aim of introducing it for 2005–06. This will assume a constant level of grant over the life of the contract, funded at a comparable level to that for other funding.
	The spending review announces proposals to further strengthen the links between central and local government through a second round of local public service agreements and setting up a new safer and stronger communities fund which will bring together existing funds from Home Office and ODPM. The fund will be administered in a new way to achieve outcomes agreed between local authorities and their partners and central government.
	Going further, the review also announces plans to launch nine pilot local area agreements in 2005–06 with a view to national rollout from 2006–07. Local area agreements are a radical new approach based on outcomes agreed between central and local government and their partners across a range of their functions. They will simplify funding streams, allow more flexible local solutions for local problems and help join up public services at local level.
	The spending plans have been informed by discussion with local government as we looked to consider pressures and the scope for efficiency savings. It provides the funding for increased activity on local authority resilience capacity where councils will see a doubling of provision for emergency planning in 2005–06 and beyond when the civil defence grant rolls into general grant reflecting the critical role that local authorities play in preparing for emergencies. Under the plans the Government are also aiming to continue the modernisation of the fire and rescue service so that, by 2010, an extra 900 lives can have been saved and the number of deliberate fires reduced by almost 90,000. An additional £20 million by 2007–08 for the proposed waste performance reward grant will also help deliver a continuing increase in the proportion of household waste recycled. The Chancellor's announcement sustains and builds on existing progress under the sustainable communities plan. The spending plans present a real opportunity for local government to improve local services through increased investment from Government and through the generation of further efficiency savings.

NORTHERN IRELAND

Forest Service

Ian Pearson: Forest Service is an Executive agency of the Department of Agriculture and Rural Development for Northern Ireland. It acts on behalf of the Department for the promotion of the interests of forestry in Northern Ireland, the development of afforestation, the production and supply of timber, and the maintenance of adequate reserves of growing trees. Its functions include the delivery of social, recreational and environmental benefits for the public at large.
	I have set the following key targets for the agency for the 2004–05 business year:
	To publish a strategy for the delivery of forest policy by December 2004.
	To establish 500 hectares of new plantations.
	To retain certification under the UK woodland assurance standard.
	To replant 750 hectares of land following harvesting.
	To produce 400,000m 3 of timber for sale to the wood processing sector.
	To achieve 400,000 paying visitors to forests.

HOME DEPARTMENT

Commission for Racial Equality

David Blunkett: The Commission for Racial Equality's annual report 2003 is published today.
	Copies will be available in the Library of the House. Copies will also be sent to the Scottish Parliament and the National Assembly for Wales.

United Kingdom Passport Service

Des Browne: The United Kingdom Passport Service annual report and accounts 2003–04 has been published today and copies have been placed in the Library of the House.

SOLICITOR-GENERAL

Crown Prosecution Service

Harriet Harman: The annual report of HM Crown Prosecution Service inspectorate has today been published and laid before Parliament. Copies have been placed in the Libraries of both Houses.

WORK AND PENSIONS

Health and Safety Commission

Andrew Smith: I am pleased to announce the reappointment of Bill Callaghan as chair of the Health and Safety Commission. Bill has held this position since October 1999 and has led the Commission through an important period of change, during which the new strategy for workplace health and safety in Great Britain to 2010 and beyond was developed and launched.